Friday, April 13, 2012

Packer tightens his hold on the Crown jewell; Crown prince Packer could be king by Christmas - 13th April 2012

James Packer looks like reclaiming the $6.5 billion Crown casino group as a subsidiary of his family company by Christmas after lifting his stake beyond 48 per cent yesterday in a $133 million deal.

Investment bank UBS handled the line of 15.25 million shares in Crown, traded at $8.707 each as the market closed.

Packer's Consolidated Press Holdings declared its interest in the shares in early December, notifying Crown it had struck a cash-settled equity derivative ''with an investment bank'' that gave the company an economic exposure to the share price movements on 14.6 million Crown shares.

For UBS, the Crown buying is handy work - but a comparative consolation prize to rival Deutsche Bank's similar arrangements with Packer over $254 million of Echo Entertainment shares.

Echo, owner of Sydney's Star casino, is in Packer's sights after he took his stake to 10 per cent with the Deutsche deal and indicated he has an appetite for more - applying for NSW government approval to cross that legislated 10 per cent limit and pushing for a board seat.

The assault on Echo has been muddied by Packer expressing a desire to attach the Star licence to a property development plan in a sensitive Sydney harbourside development zone.

As Insider noted last month, Packer's move on Echo's share register last month was controversial not so much for his not having revealed the stake earlier, but for companies law that apparently lags behind the sophisticated financial engineering that allows such derivative deals to escape disclosure to the general market.

It is a decade and a half since James' dad, Kerry, rescued his mate Lloyd Williams' Crown, which was sinking into Melbourne's Yarra River under $2 billion of debt. James replaced Williams as chairman not long after that.

Parked in Publishing and Broadcasting, Crown was relisted on the ASX almost five years ago when Packer jnr split PBL in two. The other arm, Consolidated Media Holdings, then held his interests in the Nine Network and various magazines.

Packer's Cons Press last increased its Crown stake in October, and under the takeovers code is allowed to add up to 3 per cent of its holding in any six-month period without triggering the need to have a formal bid on the table.

That means that Packer could legally take his holding in Crown above 50 per cent by October this year, making it a Cons Press subsidiary and having unchallengeable control. Normally that would mean a downgrading of the share price, because there is no premium for control - but any investor in Crown expecting a full and generous offer from a member of the Packer family would have to be an extreme optimist. (Credit: Fairfax Media)